Question 1

What's the difference between bookkeeping and accounting?

Accepted Answer

Bookkeeping is the ongoing recording of day-to-day financial transactions — sales, purchases, receipts, payments. Accounting builds on that data to prepare accounts, analyse performance, and handle tax compliance and planning.

Question 2

Do I legally need to keep business records, and for how long?

Accepted Answer

Yes — HMRC requires businesses to keep records supporting tax returns for at least 5 years after the submission deadline, and limited companies must keep records for 6 years from the end of the financial year. This applies whether you're self-employed or run a limited company.

Question 3

What records do I need to keep for my business?

Accepted Answer

This typically includes sales and purchase invoices, bank statements, receipts for expenses, payroll records if you employ staff, and details of any assets bought or sold. Digital copies are generally acceptable, provided they're clear and complete.

Question 4

Which accounting software should I use?

Accepted Answer

Popular options include Xero, QuickBooks, FreeAgent, and Sage — each has different strengths depending on business size, sector, and whether you need features like inventory tracking or multi-currency support. The right choice depends on your specific setup, so it's worth discussing before committing to one.

Question 5

Can I switch accounting software once I've started using one?

Accepted Answer

Yes, though switching involves migrating historical data and can create a transition period where care is needed to avoid duplicated or missing records. Timing the switch around your year-end often makes the process cleaner.

Question 6

How often should I reconcile my bank accounts?

Accepted Answer

Ideally, reconciliation should happen weekly or at least monthly, rather than left until year-end. Regular reconciliation catches errors early and keeps your records accurate for tax reporting and cash flow visibility.

Question 7

Do I need to keep paper receipts if I have digital copies?

Accepted Answer

Generally no — HMRC accepts scanned or photographed receipts, provided they're legible and stored securely, though the original transaction details must still be accurate and complete.

Question 8

What's the benefit of cloud accounting software over spreadsheets?

Accepted Answer

Cloud software automates bank feeds, reduces manual entry errors, and is generally required for Making Tax Digital compliance, whereas spreadsheets need manual updating and don't integrate directly with HMRC's digital reporting requirements.

Question 9

Can my bookkeeping be outsourced entirely, or do I need to do some of it myself?

Accepted Answer

This varies by arrangement — some clients prefer to hand over all data entry, while others keep basic day-to-day recording in-house and have it reviewed periodically. Both approaches can work well depending on your time and comfort with the software.

Question 10

Can Ledgers help set up and manage my bookkeeping software?

Accepted Answer

Yes — we help clients choose the right software for their business, set it up correctly from the start, and either manage ongoing bookkeeping directly or provide regular oversight and reconciliation support.

Accountants & Business Services

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Frequently asked questions